The present invention relates to computer systems and software for the allocation of inventory to customer orders, and in particular, to such allocation where there is insufficient inventory for the number of customer orders.
There are many products and patents directed to systems for allocating and delivering inventory which assume there is sufficient inventory. For example, a number of systems provide just in time inventory control, such as shown in U.S. Pat. No. 6,882,982. Other patents deal with projecting the need for manufacturing raw materials or components based on projected or actual customer orders. For example, see U.S. Pat. Nos. 6,415,195 or 4,459,663.
Published U.S. Application No. 2004/0210489 shows a system for allocating inventory where there is insufficient supply. This system is directed to measuring each retailer's inventory and rate of sales in order to ensure that each retailer runs out of the product at about the same time. This patent describes the example of a new video release in which demand exceeds the supply.
A number of systems deal with whether a customer's potential order can be met. These are Available to Promise (ATP) systems. An example is found in U.S. Pat. No. 6,167,380. U.S. Pat. No. 6,188,989 appears show ATP software using forecasts.
Demand can often exceed the supply for products for a variety of reasons. A new product may be particularly difficult to manufacture, thus making it difficult to ramp up production. Marketing and order taking may precede the actual availability of the product, creating an excess of demand over supply for this reason. As new features are added to new products, or new products are developed, customer demand may exceed projections, increasing the demand beyond available supply. Typically, these problems are handled by sales administrators allocating available inventory manually on a spreadsheet, which may be updated each day. It would be desirable to automate and improve this process.
Many manufacturers have different priorities for different customers. A large national chain that is a long term customer will usually be higher priority than perhaps a small regional reseller. Companies invest heavily in soft dollar promotions that must be supported at all costs (missing an advertisement with a reseller could be considered extremely damaging). The situation is complicated by order demand received from resellers all having varying order lead times and shipment modes. Additionally, at product launch, demand may greatly exceed supply. Thus managing orders is problematic, especially for companies that launch new and innovative products every year.
Another complicating factor for order management with limited inventory is that different sales channels and customers yield different sales margins. Also, demand can be both fulfilled directly and via distributors. Thus, short Order Cycle Times can be a necessity to compete. Fines and/or penalties are sometimes imposed by resellers when orders are not fulfilled to requirements. This can be complicated by a lengthy supply chain since many products are manufactured in Asia, far away from much of the demand. Effective order management also needs to account for projected future receipts from manufacturers and remote inventory locations. Distribution profitably often requires ocean transit, which is slow.